Latest developments in Russian anti-money
laundering (AML/CFT) legislation
Alexander Mosyagin
Deputy Chairman of Commerzbank (Eurasija) SAO
Deutsche Woche 2014, St. Petersburg, 25.04.2014
Agenda
1.
Introduction Commerzbank in Russia
2.
AML as part of compliance in Russian banks
3.
Client’s Beneficial Owners
4.
KYC Procedure
5.
Payment refusal, assets freeze & account closure
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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1. Introduction Commerzbank in Russia
• Commerzbank (Eurasija) SAO is a 100percent subsidiary of Commerzbank AG
• Operates in Russia since 1999 (since
2001 licensed to open private accounts)
• In 2010 merged with Dresdner Bank
(since 1993 present in Moscow & St-Pet)
• Core business: Corporate Banking
• Core clients: German enterprises +
Russian companies having connectivity
(e.g. franchise, export or import) with
German-speaking countries & Poland
• Assets as of 1.01.14: RUB 42.4 bn
• Capital as of 1.01.14: RUB 12.8 bn
• Staff: 140 in Moscow & St-Pet (branch)
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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2. AML as part of Compliance in Russian banks
Compliance in banks
AML/CFT
Sanctions &
Embargos
Fraud
Prevention
Securities
Compliance
In contrast to German Geldwaeschegesetz Russian AML/CFT rules are strictly formalized
Banks to report to ‘watchdog’ not only suspicious, but also ‘mandatory-controlled’ transactions, e.g.:
• Bank account debit/credit in the amount of RUB 600k or above if the company-account
holder has been existing for less than 3 months (incl. due to reorganization)
• Acceptance or transfer of leased assets having a value of RUB 600k or above
• Lending/borrowing of interest-free loans from RUB 600k and above by non-banks
• Transactions for ownership transfer over real estate having a value of RUB 3m or above
Violation of reporting requirements (incl. minor issues: 1-2 day delay, mistypes in message
fields) leads to sanctions imposed by CBR against both banks and their employees
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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3. Client’s Beneficial Owners
As of 01.07.2013 Russian AML Law introduced ‘Beneficial Owner’:
an individual who directly or indirectly holds or controls 25% or more shares or voting rights in
the corporate client or is able to control client’s actions, i.e. valid for individual clients as well
Beneficial Owners (BOs) must be disclosed by the client to bank as part of KYC check.
Exemptions:
• government (federal and local) authorities, institutions subordinated to government, public
legal entities or companies where Russia or its region owns more than 50 % shares
• international organizations, foreign states or their political units
• public companies listed on Russian stock exchanges
Client BO identification process includes two steps:
1) detection of BOs based on the client’s written disclosure
2) verification by bank of BOs identity based on ID copies
Problem: what to do if client has no access to ID of its BOs?
personal data protection?
A bank may not outsource BO identification to third parties, except in cases when individuals
transfer money without opening a bank account
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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4. KYC procedure
KYC =
banks to identify clients, their representatives, beneficiaries and BOs + collect
and file client-related data and documents to ensure AML Law compliance
Banks must undertake KYC check before opening a bank
account/ entering into a contractual arrangement
New: Clients have to disclose the purpose of setting
business relationship + planned business volume (e.g. bank
account turnover) + latest financial statements + third parties
references to confirm their business reputation
Bank must undertake AML risk assessment based on its riskscoring model; high-risk criteria are prescribed by CBR
KYC data collected by bank and AML risk assessment
must be reviewed min once a year for all AML risk levels!
If bank reveals that KYC data is incorrect or outdated the
bank has 7 business days to remedy it
Beneficiary (= principal under agency/commission/trust
arrangement) must be identified prior to opening a bank
account or, if newly appeared in specific transaction, within
7 business days since the effective date of this transaction
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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5. Payment refusal, assets freeze & account closure
Banks received legal tools to prevent their involvement in AML/CTF activities
Refusal to open an account if bank
employees become suspicious that the
purpose of such account is money
laundering or terrorism financing
Special account to be opened with CBR
where unclaimed money have to be
transferred into after bank account closure
Refusal to perform client payment
instruction which is not justified by legal
documents requested by bank or if bank
employees become suspicious that the
payment is made for money laundering
or terrorism financing purpose
Termination/closure of bank account in
case of 2 or more bank’s refusals to
perform client payment instruction
within the same calendar year (60 day
prior notice to be served)
Freeze of account balance and other
assets of black-listed (i.e. allegedly
involved into terrorist or extremist
activities) persons held by the bank
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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Open questions
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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Thank you very much for your attention!
Deutsche Woche 2014, St. Petersburg, 25.04.2014
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